Social economy in Romania Current situation, trends, and challenges - - PowerPoint PPT Presentation

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Social economy in Romania

Current situation, trends, and challenges

Ancuta Vamesu, IES ROMANIA February 2013

Proiect cofinanţat din Fondul Social European prin Programul Operaţional Sectorial Dezvoltarea Resurselor Umane 2007- 2013 “ Investeşte în oameni!”

Presentation

• 1. Where does social economy in Romania come from?

– a glimpse in time

• 2. The Data – Atlas overall data 2010 and main

tendencies 2000-2010

• 3. Zoom in by sector – associations, coops and credit

unions (evolution 1990-2010), mutuals and agriculture coops

• 4. Current issues & main challenges
• 5. Some possible reccommendations

Proiect cofinanţat din Fondul Social European prin Programul Operaţional Sectorial Dezvoltarea Resurselor Umane 2007- 2013 “ Investeşte în oameni!”

Romanian King Ferdinand attends the Congress of Cooperatives 1925

The cooperative system in Romania goes back 150 years. The first Romanian association of cooperatives was in fact one of the founders of the International Cooperative Alliance in 1895, which still exists today. On a downward trend after 1990, the arts and crafts cooperative system still needs to recover, besides the local market, the prestige of its products.

Proiect cofinanţat din Fondul Social European prin Programul Operaţional Sectorial Dezvoltarea Resurselor Umane 2007- 2013 “ Investeşte în oameni!”

Romanian Athenaeum Historical Concert Hall in Bucharest 1885 Public subscription campaign Give 1 leu for Ateneu!

Literary Society ‘Romanian Athenaeum’ lanched a national public subscription campaign for a modern concert hall . The Romanian Athenaeum was finalized in 1888 by the architect Albert Galleron, and ….restored in 2000 – 2004! Two times ‘Give a Leu for Athenaeum’ initiative! – the people solved a problem through social innovation -Crowd source investment !

Proiect cofinanţat din Fondul Social European prin Programul Operaţional Sectorial Dezvoltarea Resurselor Umane 2007- 2013 “ Investeşte în oameni!”

Social economy in Romania – the Atlas

• Definitions Social economy vs social entreprise
• The Atlas - published first in 2011 – with

retrospective data from 2000, 2005, 2007, 2008,2009 and in 2012; will continue in 2013

• Research Partners - University of Bucharest,

Institute of Quality of Life and National Institute

• f Statistics

Proiect cofinanţat din Fondul Social European prin Programul Operaţional Sectorial Dezvoltarea Resurselor Umane 2007- 2013 “ Investeşte în oameni!”

Main data – FY 2010

• No. of active organisations – 31,152

(does not include housing associations – more than 15,000) 6.4% of registered entreprises

• Total revenues

7,601 mil. RON / 1,805 Mil Euro equiv. Comparabale to turnover in industries such as wearing apparel, or wood products

• No. of employees – 100,335 jobs

2,3% of workforce employed in Romania Comparable to industries such as financial intermediation and insurance

Proiect cofinanţat din Fondul Social European prin Programul Operaţional Sectorial Dezvoltarea Resurselor Umane 2007- 2013 “ Investeşte în oameni!”

Social economy in Romania - main sectors

• No. of organisations

(registering balance sheets 2010)

5.000 10.000 15.000 20.000 25.000 30.000 2000 2005 2007 2009 2010 Year

Associations and foundations Cooperatives Credit unions

Associations and foundations 85% Cooperatives 6% Credit unions 9%

Proiect cofinanţat din Fondul Social European prin Programul Operaţional Sectorial Dezvoltarea Resurselor Umane 2007- 2013 “ Investeşte în oameni!”

Social economy in Romania

• main sectors

Revenues RON 2000-2010

1.000.000 2.000.000 3.000.000 4.000.000 5.000.000 6.000.000 2000 2005 2007 2009 2010 Revenues (thou RON)

Associations and foundations Cooperatives Credit Unions

Associations and foundations 75%

Cooperatives 20% Credit Unions 5%

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Social economy in Romania - main sectors Paid employment in social economy organisations by type 2000 - 2010

Associations and foundations 61% Coops 34% Credit unions 5%

20.000 40.000 60.000 80.000 100.000 120.000 2000 2005 2007 2009 2010 Associations and foundations Coops Credit unions Total social economy

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• Dominated by associations and foundations, mostly

registered after 1989

• Cooperatives declining – mostly registered before

1989, enheriting assets from before 1989

• Credit unions stable / stagnating – survived in a

changing environment in the last 22 years

• Types of organisations missing

– mutuals – although Romania quoted as one of the most “mutual markets” by ICMA

• agriculture coops – more recently several startups

Social economy in Romania - conclusions

Proiect cofinanţat din Fondul Social European prin Programul Operaţional Sectorial Dezvoltarea Resurselor Umane 2007- 2013 “ Investeşte în oameni!”

 Social service providers – 50% of the registered providers (the rest public), 50% of clients of home care services,  Numerous WISE and protected workshops  Employment services and training providers  Education – kindergartens, after schools, higher education  Agriculture associations – numerous but with poor

• rganisational capacities

 Forrest owners – commons associations numerous, significant assets – traditional properties of forests - but poor organisational capacities Social economy in Romania associations and foundation

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 Employees – and self-employed

• Total membership almost 1 mil - 16% of

employees were members of a credit union at the end of 2010.

• 28% decline in membership 2004-2010

 Retired – complex services – small loans, financial help, social and medical services, food shops and pharmacy Estimated 1,5 mil members - 36% of the retired at the end of 2010 The only social economy organisation with an

• n-line TV system – full transparency

http://www.omeniatv.ro/ Social economy in Romania credit unions

200.000 400.000 600.000 800.000 1.000.000 1.200.000 1.400.000

Membership in credit unions affiliated to the National Union

Proiect cofinanţat din Fondul Social European prin Programul Operaţional Sectorial Dezvoltarea Resurselor Umane 2007- 2013 “ Investeşte în oameni!”

 Membership in consumer coops decreased 30 times - from 655 thou. in 1989 to less than 28 thou.  Membership in worker coops decreased from 430 thou. to 58 thou. Social economy in Romania – Cooperatives

50000 100000 150000 200000 250000 300000 350000 1992 1995 2000 2005 2007 2008 2009

Employment in coops in Romania 1992-2009

6550000 6500000 2734416 1354269 35029 33196 30883 29642 27823 1000000 2000000 3000000 4000000 5000000 6000000 7000000 1989 1991 1996 2000 2005 2006 2007 2008 2009 Numar membrii

Membership in comsumer coops 1989 - 2009

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• No mutual society registered –no legislation for such societies
• nly for subsidiaries of international mutual companies
• Romania - the fourth ‘most mutual’ market

“Like fellow Eastern European markets Slovakia and Hungary, the Romanian market has a mutual sector that is composed of commercial subsidiaries of large mutual groups from Austria, Germany and the Netherlands. These multinational groups have stimulated growth of the mutual sector across Eastern Europe as well as many emerging economies in Latin America.” ICMF

Social economy in Romania – Mutuals – insurance

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• Subsistence (SFs) and semi-subsistence

farms (SSFs) prevalent in the New Member States, in Bulgaria, Hungary, Latvia, Lithuania, Slovakia and Romania 95% or more of agricultural holdings, most living in poverty.

• Characteristics of SF/SSF
• farming activities form a livelihood

strategy as the output is consumed directly;

• the proportion of output sold is low –

a significant proportion is not sold

• difficult to reach through

networking/cooperation initiatives

• reluctant to register

Social economy in Romania – Agriculture coops

Country Number of farms % of farms Romania 3,020,180 71 Poland 1,393,760 56 Hungary 557,620 78 Bulgaria 416,550 78 Italy 348,250 20 Greece 155,450 19 Lithuania 124,330 49 Spain 120,440 11 Portugal 104,580 32 United Kingdom 103,380 36 Latvia 83,790 65 Slovakia 55,620 81

Number of SF SSF by member state - less than 1 ESU (European Size Unit)*

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• Roles of SF/SSF in agriculture

and rural development:

• a buffer against poverty, absolute deprivation, providing at least

meagre levels of food and income, in environments of weak or absent social safety nets, high urban unemployment, weak nonfarm rural economies and tumultuous economic change, as witnessed in Central and Eastern Europe;

• suppliers of environmental goods and cultural assets that can

provide the basis for diversification into speciality foods and rural tourism. Lack of market participation due to transaction costs and the inability to meet agricultural standards makes cooperation between small farmers central to improving their access to markets.

Social economy in Romania – Agriculture coops

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• 1. Low employment rate – small number of jobs

created even before the crisis - emigration

• 2. Precarious employment – Eg. Agriculture workers

and farmers (semi)-subistence – 3 mil. small farms and 800.000 agriculture workers – informal work (no insurance)

• 3. Highest poverty rate in EU >40% - eg Working poor ;

multiple faceted exclusion –– financial exclusion – importance of credit for self-employment

• 4. Increasing rural/urban and regional disparities

Main socio-economic challenges

Proiect cofinanţat din Fondul Social European prin Programul Operaţional Sectorial Dezvoltarea Resurselor Umane 2007- 2013 “ Investeşte în oameni!”

• The social economy landscape in Romania, as probably in other former

communist countries, is puzzled and scarcely visible despite its growth.

• The NGOsector - policy entrepreneur - inclusion of the social economy on

the agenda of the government – mainly through programming for ESF.

• Recently growing interest of public authorities, still with a limited

understanding of the concept – as work integration of marginalized group in the mainstream economy.

• Unsuccessful efforts to improve the regulatory framework - the draft

legislation limits social economy to social entreprises and still under debate after more than 2 years since the launch of the public consultation.

• No coherent social or civil dialogue mechanism
• The legal and policy issues that affect the sector are more complex than a

framework law. Each type of entity (associations, cooperatives, credit unions, housing associations, commons etc) faces obsolete legislations, unclear concepts and requirements, limitations to their entrepreneurial activities. (see M. Lambru - University of Bucharest paper)

Main challenges for the social economy sector in Romania

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9% Social economy supported by ESF in Romania 2007-2013 Key intervention area 6.1 Social economy development

Results - achivements

• Experimenting various approaches by various stakeholders –

NGOs, local governments, even central government for particular target groups – disabled, roma, women, ex-convicts, addicted, homeless

• Increased visibility, research and training
• Start up of 144 social entreprises

Weaknesses

• limited to work integration – new forms of WISE and to extremely

vulnerable groups and not long term unemployed, inactive etc.

• did not foresee actions in favor of traditional social economy -

worker coops, micro-credit, social services

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Social Economy agenda for Romania 2014-2020

1. Continue to develop the associative sector by removing barriers to registration and operation of economic activities that currently exist 2. Re-launching the coop sector in particular agriculture coops and worker coops 3. Relaunch the credit union system of employees - develop micro-credit systems within the credit union movement 4. Consolidate the credit unions of the elderly and their services 5. Recognition of social economy by the public authorities as part of the wider entreprise sector – including through a framework law 6. Social policy shift – from passive to active inclusion and clear design of a welfare mix market

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European policies - development of social economy in Romania

• the Social Business Initiative (SBI)

+ increased interest in these entreprises – unintended side-effect - misunderstanding social entreprise / social economy, minimised importance of traditional social economy

• European level measures necessary

These would contribute to increasing economic and social performances

• f SE organisations and their role in welfare and economic stability.

Particularly necessary for sectors were there is already a trans-national dynamic or where social economy in Romania is lagging behind such as credit, agriculture coops and mutuals, social services and employment Could be:

• 1. Policy discussions for National Authorities and national social

economy networks – particular role for CESE

• 2. European Funds and programmes to provide support for
• start-up and development of local SE organisations in sectors such as

credit, agriculture coops and mutuals, WISE and social services and 2nd and 3rd level types of organisations in countries where they do not exist – eg credit unions not eligible under Jasmine and Progress

Proiect cofinanţat din Fondul Social European prin Programul Operaţional Sectorial Dezvoltarea Resurselor Umane 2007- 2013 “ Investeşte în oameni!”

European policies - development of social economy in Romania

• 2. European Funds and programmes – cont.
• transfer of know how – European learning not only through

commercial subsidiaries of credit coops and mutuals, but also through local membership organisations,

• integration of SE actors from New Members States into their

respective European or trans-national networks

• Increased visibility of all social economy actors

ESF in Romania

• Programmatic issues - so far limited to support for WISE
• Implementation mechanisms – currently under Ministery of Labor

and Social Protection - too bureaucratic, too slow, with little understanding for the specifics of a business, start-up support programme. Reccomend use of global grants schemes through intermediaries which combine grant-making know how with business management know how

Proiect cofinanţat din Fondul Social European prin Programul Operaţional Sectorial Dezvoltarea Resurselor Umane 2007- 2013 “ Investeşte în oameni!” Proiect cofinanţat din Fondul Social European prin Programul Operaţional Sectorial Dezvoltarea Resurselor Umane 2007- 2013 “ Investeşte în oameni!”

Public Policies Research Consulting and training – capacity building

Promotion

Institute of Social Economy

A Resource Centre for social economy - associations and foundations, credit unions, coops, farmers associations – for all those interested in social economy in Romania

Proiect cofinanţat din Fondul Social European prin Programul Operaţional Sectorial Dezvoltarea Resurselor Umane 2007- 2013 “ Investeşte în oameni!”

Thank you! ancuta.vamesu@fdsc.ro www.ies.org.ro